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Simon's SouthPark Mall Picked for Tommy John's Next Store

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Simon Property Group Inc. (SPG - Free Report) announced that comfort-focused lifestyle brand — Tommy John — will expand its retail footprint by opening a store at SouthPark shopping mall in Charlotte, NC.

The new store is slated to open later this summer in a 3,000-square-foot space between Neiman Marcus and Belk. This will mark Tommy John’s second brick-and-mortar outlet at a Simon property after its retail store launch at the iconic King of Prussia mall in suburban Philadelphia last October.

Tommy John's physical store development is being helped by Simon Property through its New Business Team. This team makes diligent efforts with online brands to go from 'Clicks to Bricks.’

The opening of a new store by Tommy John at SouthPark is a strategic fit. Developed in 1970 in the affluent SouthPark neighborhood, it is the largest shopping mall between Atlanta and Washington, D.C. The mall, which is anchored by Nordstrom (JWN - Free Report) , Belk, Dillard's (DDS - Free Report) , Macy's (M - Free Report) and Neiman Marcus, enjoys elevated demand for space.

Notably, a rapid shift in customers' shopping preferences to online channels has jeopardized the traffic flow in malls. In fact, with e-commerce grabbing market share from brick-and-mortar stores, retailers are compelled to reconsider their footprint and eventually opt for store closures, while others unable to cope with competition have been filing bankruptcies. Amid these, tenants are also demanding substantial lease concessions, which, however, mall landlords find unjustified. Such an environment has cast a pall over retail REITs like Simon Property and others.

However, Simon Property is making every possible move to counter this challenging situation. The company is undertaking strategic measures to help online retailers fortify their physical presence, besides taking steps to support omni-channel strategy.

Moreover, recently, the company announced the continuation of its plan to recapture the former Sears locations across its portfolio, transforming those into retail, fitness, dining and entertainment hubs, and thereby drawing more traffic at these destinations. In fact, it is making heavy investments not only to elevate the value of its retail properties, but also for exploring mixed-use development option which has gained popularity in recent years.

Nevertheless, the implementation of such measures requires a decent upfront cost and therefore, would limit any robust growth in the company’s near-term profit margins. Also, rate hike has added to its woes.

Simon Property has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has rallied 13.9% over the past three months, outperforming the industry’s growth of 11.1%.



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